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Accounting Policies of Assam Petrochemicals Ltd. Company

Mar 31, 2014

1.1 Basis of accounting and preparation of financial statements

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notified under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The financial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the financial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the financial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Inventories

Items of inventories are measured at lower of cost or net realizable value, after providing for obsolescence, if any. Cost of inventories comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Cost of raw-materials, process chemicals, stores and spares, packing materials, and other products are determined on weighted average basis. Cost of production of finished stocks is determined on by absorption costing method. In calculating the valuation of unsold finished stock, overhead expenses have been absorbed up to the stage of Production only.

1.4 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignificant risk of changes in value.

1.5 Cash flow statement

Cash flows are reported using the indirect method, whereby profit / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash flows from operating, investing and financing activities of the Company are segregated based on the available information.

Depreciation has been provided on the written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956. However, in case of plant & machinery and electrical equipment, depreciation has been charged on straight line method up to 95% of the historical cost retaining 5% as salvage value. Similarly for other Assets depreciation has not been charged on residual 5 % written down value.

Intangible assets are amortised over their estimated useful life. ''The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each financial year and the amortisation method is revised to reflect the changed pattern.

1.7 Revenue recognition

Sale of goods

Sales are recognised, net of returns and trade discounts, on transfer of significant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.

1.8 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.9 Tangible fixed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fixed assets includes interest on borrowings attributable to acquisition of qualifying fixed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fixed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fixed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fixed assets is capitalised only if such expenditure results in an increase in the future benefits from such asset beyond its previously assessed standard of performance.

Fixed assets acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till commissioning of the project.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately in the Balance Sheet.

Capital work-in-progress:

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.10 Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

1.11 Foreign currency transactions and translations Initial recognition Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement of foreign currency monetary items at the Balance Sheet date

Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates.

In the case of integral operations, assets and liabilities (other than non-monetary items), are translated at the exchange rate prevailing on the Balance Sheet date. Non-monetary items are carried at historical cost. Revenue and expenses are translated at the average exchange rates prevailing during the year. Exchange differences arising out of these translations are charged to the Statement of Profit and Loss.

Treatment of exchange differences

Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company and its integral foreign operations are recognised as income or expense in the Statement of Profit and Loss. The exchange differences on restatement / settlement of loans to non-integral foreign operations that are considered as net investment in such operations are accumulated in a ""Foreign currency translation reserve"" until disposal / recovery of the net investment.

The exchange differences arising on restatement / settlement of long-term foreign currency monetary items are capitalised as part of the depreciable fixed assets to which the monetary item relates and depreciated over the remaining useful life of such assets or amortised on settlement / over the maturity period of such items if such items do not relate to acquisition of depreciable fixed assets. The unamortised balance is carried in the Balance Sheet as "Foreign currency monetary item translation difference account" net of the tax effect thereon.

1.12 Government grants, subsidies and export incentives

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Export benefits are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

Government grants in the nature of promoters'' contribution like investment subsidy, where no repayment is ordinarily expected in respect thereof, are treated as capital reserve. Government grants in the form of non-monetary assets, given at a concessional rate, are recorded on the basis of their acquisition cost. In case the non-monetary asset is given free of cost, the grant is recorded at a nominal value.

Other government grants and subsidies are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.

1.13 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties.

Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

1.14 Employee benefits

Employee benefits include provident fund, superannuation fund, gratuity fund, compensated absences, long service awards and post-employment medical benefits.

Defined contribution plans

The Company''s contribution to provident fund and superannuation fund are considered as defined contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defined benefit plans

For defined benefit plans in the form of gratuity fund and post-employment medical benefits, the cost of providing benefits is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profit and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefits are already vested and otherwise is amortised on a straight-line basis over the average period until the benefits become vested. The retirement benefit obligation recognised in the Balance Sheet represents the present value of the defined benefit obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Short-term employee benefits

The undiscounted amount of short-term employee benefits expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefits include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under :

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

Long-term employee benefits

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled. Long Service Awards are recognised as a liability at the present value of the defined benefit obligation as at the Balance Sheet date.

1.15 Employee share based payments

The Company has no Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

1.16 Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profit and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profit and Loss during extended periods when active development activity on the qualifying assets is interrupted.

1.17 Segment reporting

The Company identifies primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate financial information is available and for which operating profit/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. Management has identified two reportable business segments namely Methanol & Formalin and Siliguri has been identified as a geographical segment.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identified to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities"

1.18 Earnings per share

Basic earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profit / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profit per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

1.19 Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefits in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefit associated with it will flow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be sufficient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that sufficient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability.

Current and deferred tax relating to items directly recognised in equity are recognised in equity and not in the Statement of Profit and Loss.

1.20 Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash flows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profit and Loss, except in case of revalued assets.

1.21 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outflow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefits) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to reflect the current best estimates. Contingent liabilities are disclosed in the Notes.

1.22 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.

1.23 Service tax input credit

Service tax input credit is accounted for in the books in the period in which the underlying service received is accounted and when there is no uncertainty in availing / utilising the credits.

1.24 Employee Separation Cost :

Compensation to employees who have opted for retirement under voluntary retirement scheme of the company is debited to the Profit and Loss Account in the year of payment.

1.25 Dearness Allowance :

Dearneess Allowance accrues after being approved by the Board of Directors and accordingly is charged to the Statement of Profit and Loss in the year of approval.

1.26 Other Non Current Assets :

The value of Non Current Assets includes value of unamortised catalyst which are amortised on the basis of the utilisation certificates of the Engineering Department.

1.27 Excise Duty :

Excise duty is accounted on the basis of, both, payment made in respect of goods cleared as also provision made for goods lying in excise bonded tank.


Mar 31, 2013

1.1 Basis of accounting and preparation of fi nancial statements

The fi nancial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to comply with the Accounting Standards notifi ed under the Companies (Accounting Standards) Rules, 2006 (as amended) and the relevant provisions of the Companies Act, 1956. The fi nancial statements have been prepared on accrual basis under the historical cost convention. The accounting policies adopted in the preparation of the fi nancial statements are consistent with those followed in the previous year.

1.2 Use of estimates

The preparation of the fi nancial statements in conformity with Indian GAAP requires the Management to make estimates and assumptions considered in the reported amounts of assets and liabilities (including contingent liabilities) and the reported income and expenses during the year. The Management believes that the estimates used in preparation of the fi nancial statements are prudent and reasonable. Future results could differ due to these estimates and the differences between the actual results and the estimates are recognised in the periods in which the results are known / materialise.

1.3 Inventories

Items of inventories are measured at lower of cost or net realizable value, after providing for obsolescence, if any. Cost of inventories comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Cost of raw- materials, process chemicals, stores and spares, packing materials, and other products are determined on weighted average basis. Cost of production of fi nished stocks is determined on by absorption costing method. In calculating the valuation of unsold fi nished stock, overhead expenses have been absorbed up to the stage of Production only.

1.4 Cash and cash equivalents

Cash comprises cash on hand and demand deposits with banks. Cash equivalents are short-term balances (with an original maturity of three months or less from the date of acquisition), highly liquid investments that are readily convertible into known amounts of cash and which are subject to insignifi cant risk of changes in value.

1.5 Cash flow statement

Cash flows are reported using the indirect method, whereby profi t / (loss) before extraordinary items and tax is adjusted for the effects of transactions of non-cash nature and any deferrals or accruals of past or future cash receipts or payments. The cash fl ows from operating, investing and fi nancing activities of the Company are segregated based on the available information.

1.6 Depreciation and amortisation

Depreciation has been provided on the written down value method as per the rates prescribed in Schedule XIV to the Companies Act, 1956. However, in case of plant & machinery and electrical equipment, depreciation has been charged on straight line method up to 95% of the historical cost retaining 5% as salvage value. Similarly for other Assets depreciation has not been charged on residual 5 % written down value.

Intangible assets are amortised over their estimated useful life. ''The estimated useful life of the intangible assets and the amortisation period are reviewed at the end of each fi nancial year and the amortisation method is revised to refl ect the changed pattern.

1.7 Revenue recognition

Sale of goods

Sales are recognised, net of returns and trade discounts, on transfer of signifi cant risks and rewards of ownership to the buyer, which generally coincides with the delivery of goods to customers. Sales include excise duty but exclude sales tax and value added tax.

1.8 Other income

Interest income is accounted on accrual basis. Dividend income is accounted for when the right to receive it is established.

1.9 Tangible fi xed assets

Fixed assets are carried at cost less accumulated depreciation and impairment losses, if any. The cost of fi xed assets includes interest on borrowings attributable to acquisition of qualifying fi xed assets up to the date the asset is ready for its intended use and other incidental expenses incurred up to that date. Exchange differences arising on restatement / settlement of long-term foreign currency borrowings relating to acquisition of depreciable fi xed assets are adjusted to the cost of the respective assets and depreciated over the remaining useful life of such assets. Machinery spares which can be used only in connection with an item of fi xed asset and whose use is expected to be irregular are capitalised and depreciated over the useful life of the principal item of the relevant assets. Subsequent expenditure relating to fi xed assets is capitalised only if such expenditure results in an increase in the future benefi ts from such asset beyond its previously assessed standard of performance. Fixed assets acquired and put to use for project purpose are capitalised and depreciation thereon is included in the project cost till commissioning of the project.

Fixed assets retired from active use and held for sale are stated at the lower of their net book value and net realisable value and are disclosed separately in the Balance Sheet.

Capital work-in-progress:

Projects under which assets are not ready for their intended use and other capital work-in-progress are carried at cost, comprising direct cost, related incidental expenses and attributable interest.

1.10 Intangible assets

Intangible assets are carried at cost less accumulated amortisation and impairment losses, if any. The cost of an intangible asset comprises its purchase price, including any import duties and other taxes (other than those subsequently recoverable from the taxing authorities), and any directly attributable expenditure on making the asset ready for its intended use and net of any trade discounts and rebates. Subsequent expenditure on an intangible asset after its purchase / completion is recognised as an expense when incurred unless it is probable that such expenditure will enable the asset to generate future economic benefi ts in excess of its originally assessed standards of performance and such expenditure can be measured and attributed to the asset reliably, in which case such expenditure is added to the cost of the asset.

1.11 Foreign currency transactions and translations

Initial recognition

Transactions in foreign currencies entered into by the Company and its integral foreign operations are accounted at the exchange rates prevailing on the date of the transaction or at rates that closely approximate the rate at the date of the transaction.

Measurement of foreign currency monetary items at the Balance Sheet date

Foreign currency monetary items (other than derivative contracts) of the Company and its net investment in non-integral foreign operations outstanding at the Balance Sheet date are restated at the year-end rates. In the case of integral operations, assets and liabilities (other than non-monetary items), are translated at the exchange rate prevailing on the Balance Sheet date. Non-monetary items are carried at historical cost. Revenue and expenses are translated at the average exchange rates prevailing during the year. Exchange differences arising out of these translations are charged to the Statement of Profi t and Loss.

Treatment of exchange differences

Exchange differences arising on settlement / restatement of short-term foreign currency monetary assets and liabilities of the Company and its integral foreign operations are recognised as income or expense in the Statement of Profi t and Loss. The exchange differences on restatement / settlement of loans to non-integral foreign operations that are considered as net investment in such operations are accumulated in a "Foreign currency translation reserve” until disposal / recovery of the net investment.

The exchange differences arising on restatement / settlement of long-term foreign currency monetary items are capitalised as part of the depreciable fi xed assets to which the monetary item relates and depreciated over the remaining useful life of such assets or amortised on settlement / over the maturity period of such items if such items do not relate to acquisition of depreciable fi xed assets. The unamortised balance is carried in the Balance Sheet as "Foreign currency monetary item translation difference account” net of the tax effect thereon.

1.12 Government grants, subsidies and export incentives

Government grants and subsidies are recognised when there is reasonable assurance that the Company will comply with the conditions attached to them and the grants / subsidy will be received. Government grants whose primary condition is that the Company should purchase, construct or otherwise acquire capital assets are presented by deducting them from the carrying value of the assets. The grant is recognised as income over the life of a depreciable asset by way of a reduced depreciation charge.

Export benefi ts are accounted for in the year of exports based on eligibility and when there is no uncertainty in receiving the same.

Government grants in the nature of promoters’ contribution like investment subsidy, where no repayment is ordinarily expected in respect thereof, are treated as capital reserve. Government grants in the form of non-monetary assets, given at a concessional rate, are recorded on the basis of their acquisition cost. In case the non-monetary asset is given free of cost, the grant is recorded at a nominal value.

Other government grants and subsidies are recognised as income over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis.

1.13 Investments

Long-term investments (excluding investment properties), are carried individually at cost less provision for diminution, other than temporary, in the value of such investments. Current investments are carried individually, at the lower of cost and fair value. Cost of investments include acquisition charges such as brokerage, fees and duties. Investment properties are carried individually at cost less accumulated depreciation and impairment, if any. Investment properties are capitalised and depreciated (where applicable) in accordance with the policy stated for Tangible Fixed Assets. Impairment of investment property is determined in accordance with the policy stated for Impairment of Assets.

1.14 Employee benefi ts

Employee benefi ts include provident fund, superannuation fund, gratuity fund, compensated absences, long service awards and post-employment medical benefi ts.

Defi ned contribution plans

The Company’s contribution to provident fund and superannuation fund are considered as defi ned contribution plans and are charged as an expense as they fall due based on the amount of contribution required to be made.

Defi ned benefi t plans

For defi ned benefi t plans in the form of gratuity fund and post-employment medical benefi ts, the cost of providing benefi ts is determined using the Projected Unit Credit method, with actuarial valuations being carried out at each Balance Sheet date. Actuarial gains and losses are recognised in the Statement of Profi t and Loss in the period in which they occur. Past service cost is recognised immediately to the extent that the benefi ts are already vested and otherwise is amortised on a straight-line basis over the average period until the benefi ts become vested. The retirement benefi t obligation recognised in the Balance Sheet represents the present value of the defi ned benefi t obligation as adjusted for unrecognised past service cost, as reduced by the fair value of scheme assets. Any asset resulting from this calculation is limited to past service cost, plus the present value of available refunds and reductions in future contributions to the schemes.

Short-term employee benefi ts

The undiscounted amount of short-term employee benefi ts expected to be paid in exchange for the services rendered by employees are recognised during the year when the employees render the service. These benefi ts include performance incentive and compensated absences which are expected to occur within twelve months after the end of the period in which the employee renders the related service. The cost of such compensated absences is accounted as under :

(a) in case of accumulated compensated absences, when employees render the services that increase their entitlement of future compensated absences; and

(b) in case of non-accumulating compensated absences, when the absences occur.

Long-term employee benefi ts

Compensated absences which are not expected to occur within twelve months after the end of the period in which the employee renders the related service are recognised as a liability at the present value of the defi ned benefi t obligation as at the Balance Sheet date less the fair value of the plan assets out of which the obligations are expected to be settled. Long Service Awards are recognised as a liability at the present value of the defi ned benefi t obligation as at the Balance Sheet date.

1.15 Employee share based payments

The Company has no Employee Stock Option Schemes (ESOS) in accordance with the SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999.

1.16 Borrowing costs

Borrowing costs include interest, amortisation of ancillary costs incurred and exchange differences arising from foreign currency borrowings to the extent they are regarded as an adjustment to the interest cost. Costs in connection with the borrowing of funds to the extent not directly related to the acquisition of qualifying assets are charged to the Statement of Profi t and Loss over the tenure of the loan. Borrowing costs, allocated to and utilised for qualifying assets, pertaining to the period from commencement of activities relating to construction / development of the qualifying asset upto the date of capitalisation of such asset is added to the cost of the assets. Capitalisation of borrowing costs is suspended and charged to the Statement of Profi t and Loss during extended periods when active development activity on the qualifying assets is interrupted.

1.17 Segment reporting

The Company identifi es primary segments based on the dominant source, nature of risks and returns and the internal organisation and management structure. The operating segments are the segments for which separate fi nancial information is available and for which operating profi t/loss amounts are evaluated regularly by the executive Management in deciding how to allocate resources and in assessing performance. Management has identifi ed two reportable business segments namely Methanol & Formalin and Siliguri has been identifi ed as a geographical segment.

The accounting policies adopted for segment reporting are in line with the accounting policies of the Company. Segment revenue, segment expenses, segment assets and segment liabilities have been identifi ed to segments on the basis of their relationship to the operating activities of the segment.

Inter-segment revenue is accounted on the basis of transactions which are primarily determined based on market / fair value factors.

Revenue, expenses, assets and liabilities which relate to the Company as a whole and are not allocable to segments on reasonable basis have been included under "unallocated revenue / expenses / assets / liabilities”.

1.18 Earnings per share

Basic earnings per share is computed by dividing the profi t / (loss) after tax (including the post tax effect of extraordinary items, if any) by the weighted average number of equity shares outstanding during the year. Diluted earnings per share is computed by dividing the profi t / (loss) after tax (including the post tax effect of extraordinary items, if any) as adjusted for dividend, interest and other charges to expense or income relating to the dilutive potential equity shares, by the weighted average number of equity shares considered for deriving basic earnings per share and the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Potential equity shares are deemed to be dilutive only if their conversion to equity shares would decrease the net profi t per share from continuing ordinary operations. Potential dilutive equity shares are deemed to be converted as at the beginning of the period, unless they have been issued at a later date. The dilutive potential equity shares are adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). Dilutive potential equity shares are determined independently for each period presented. The number of equity shares and potentially dilutive equity shares are adjusted for share splits / reverse share splits and bonus shares, as appropriate.

1.19 Taxes on income

Current tax is the amount of tax payable on the taxable income for the year as determined in accordance with the provisions of the Income Tax Act, 1961.

Minimum Alternate Tax (MAT) paid in accordance with the tax laws, which gives future economic benefi ts in the form of adjustment to future income tax liability, is considered as an asset if there is convincing evidence that the Company will pay normal income tax. Accordingly, MAT is recognised as an asset in the Balance Sheet when it is probable that future economic benefi t associated with it will fl ow to the Company.

Deferred tax is recognised on timing differences, being the differences between the taxable income and the accounting income that originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is measured using the tax rates and the tax laws enacted or substantially enacted as at the reporting date. Deferred tax liabilities are recognised for all timing differences. Deferred tax assets in respect of unabsorbed depreciation and carry forward of losses are recognised only if there is virtual certainty that there will be suffi cient future taxable income available to realise such assets. Deferred tax assets are recognised for timing differences of other items only to the extent that reasonable certainty exists that suffi cient future taxable income will be available against which these can be realised. Deferred tax assets and liabilities are offset if such items relate to taxes on income levied by the same governing tax laws and the Company has a legally enforceable right for such set off. Deferred tax assets are reviewed at each Balance Sheet date for their realisability

Current and deferred tax relating to items directly recognised in equity are recognised in equity and not in the Statement of Profi t and Loss.

1.20 Impairment of assets

The carrying values of assets / cash generating units at each Balance Sheet date are reviewed for impairment. If any indication of impairment exists, the recoverable amount of such assets is estimated and impairment is recognised, if the carrying amount of these assets exceeds their recoverable amount. The recoverable amount is the greater of the net selling price and their value in use. Value in use is arrived at by discounting the future cash fl ows to their present value based on an appropriate discount factor. When there is indication that an impairment loss recognised for an asset in earlier accounting periods no longer exists or may have decreased, such reversal of impairment loss is recognised in the Statement of Profi t and Loss, except in case of revalued assets.

1.21 Provisions and contingencies

A provision is recognised when the Company has a present obligation as a result of past events and it is probable that an outfl ow of resources will be required to settle the obligation in respect of which a reliable estimate can be made. Provisions (excluding retirement benefi ts) are not discounted to their present value and are determined based on the best estimate required to settle the obligation at the Balance Sheet date. These are reviewed at each Balance Sheet date and adjusted to refl ect the current best estimates. Contingent liabilities are disclosed in the Notes.

1.22 Insurance claims

Insurance claims are accounted for on the basis of claims admitted / expected to be admitted and to the extent that there is no uncertainty in receiving the claims.


Mar 31, 2012

A. Basis of Preparation of financial Statements:

Financial statements are prepared on accrual basis and under historical cost convention and in accordance with the Generally accepted Accounting principles in India , the provisions of the Companies Act, 1956 and Accounting Standards issued under the Companies ( Accounting Standard) Rules ,2006, notified under section 211( 3C) of the Companies Act 1956.

Cash flow statement has been prepared in accordance with the indirect method prescribed in Accounting Standard -3 issued under the Companies (Accounting Standard ) Rules 2006 and as required by the SEBI

B. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of financial statements and the reported amount of revenues and expenses during the reporting period. Difference between the actual results and estimates are recognized in the period in which the results are known / materialized.

C. Fixed Assets:

Fixed assets are stated at cost net of modvat/cenvat value added tax (wherever credit of the same have been taken) and include amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All cost, including financing cost till commencement of commercial production, net of charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized. In case of assets discarded/retired from active use held for disposal are stated at their net book value and shown separately in the Notes to Fixed Assets. Project under commissioning and other Capital Work-in-Progress are carried at cost comprising direct related incidental expenses and attributable interest.

D. Depreciation:

Depreciation on fixed assets is provided on written down value method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956. However, in case of plant & machinery and electrical equipment, depreciation has been charged on straight line method up to 95% of the historical cost retaining 5% as salvage value. Similarly for other Assets depreciation has not been charged on residual 5 % written down value.

E. Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit & Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized in the prior accounting period is reversed if there has been a change in the estimates of the recoverable amount, subject to a maximum of depreciated historical cost.

F. Foreign Currency Transactions:

(a) Transaction denominated in the foreign currencies are normally recorded at the exchange rate prevailing at the time of the transaction.

(b) Monetary items denominated in the foreign currencies at the year end are restated at the year end rates.

(c) Any income or expenses on account of exchange difference on translation is recognized in the profit & loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

G. Investments:

Current investments are carried at the lower of cost and quoted/fair value, computed category wise. Long term investments are stated at cost. Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.

H. Inventories:

Items of inventories are measured at lower of cost or net realizable value, after providing for obsolescence, if any. Cost of inventories comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Cost of raw- materials, process chemicals, stores and spares, packing materials, and other products are determined on weighted average basis. Cost of production of finished stocks is determined on by absorption costing method. In calculating the valuation of unsold finished stock, overhead expenses have been absorbed up to the stage of Production only.

I. Other Non Current Asset:

The Value of Non Current Assets includes value of unamortized catalyst which are amortized on the basis of the utilization certificates of the Engineering Department.

J. Turnover:

Turnover is recognized when goods are supplied/ dispatched and when significant risks and rewards of ownership of goods are transferred to the customers.

K. Excise Duty:

Excise Duty is accounted on the basis of, both, payments made in respect of goods cleared as also provision made for goods lying in excise bonded tank.

L. Employee Benefits:

Employee benefits are accounted for as per AS-15 issued under the Companies (Accounting Standards) Rules,2006. Company''s contribution to Provident & Pension Fund is charged to Profit & Loss Account. Gratuity and Leave Encashment Benefit are charged to Profit & Loss Account on the basis of certificate issued by Life Insurance Corporation of India with whom policies are taken, based on their actuarial valuation. Short -term employee benefit and short term liability are also accounted for as per AS-15.

M. Borrowing Cost :

Borrowing cost that are attributable to the acquisition of qualifying assets are capitalized as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use. All other borrowing cost are charged to revenue.

N. Employees Separation Costs :

Compensation to employees who have opted for retirement under voluntary retirement scheme of the company is debited to the profit and loss account in the year of payment.

O. Provision for Current and Deferred Tax:

Provision for current tax is made after taking into consideration benefits admissible under the provisions of The Income Tax Act, 1961. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that are enacted or substantially enacted as on the balance sheet date. The deferred tax assets is recognized and carried forward only to the extent that there is a reasonable certainty that asset will be realized in future.

P. Provision, Contingent Liabilities & Contingent Assets:

Provision involving substantial degree of estimation in measurement are recognized when there is a present obligation as a result of post events and it is probable there will be an outflow of resources. Contingent liabilities are not recognized but are disclosed in the notes. Contingent assets are not recognized in the financial statements.

Q. Segment Reporting :

The accounting policies adopted for segment reporting are in line with AS-17 issued under the Companies (Accounting Standard ) Rules 2006. Revenue expenses have been identified to segments on the basis of their relationship to the operating activities of the segment and common expenses/ income are allocated to segment on a reasonable basis. Management has identified two reportable business segments namely Methanol and Formalin and Siliguri has been identified as a geographical segment.

R. Government Grants and Subsidies:

Government grants/subsidies related to depreciable fixed assets are treated as deferred reserve which is allocated to income over the period and proportions in which depreciation on those assets is charged. Government grants/subsidies related to revenue (like transport subsidy, power subsidy) are recognized as income in the year of receipt instead in the year to which it pertains due to the uncertainty and abnormal delay attached to the same.

S. Intangible Assets

Intangible Assets are accounted for as required by AS-26 issued under the Companies (Accounting Standard ) Rules 2006.


Mar 31, 2011

1. Basis of Preparation of financial Statements:

The financial statements are prepared under the historical cost convention in accordance with the generally accepted accounting principles in India and the provisions of the Companies Act, 1956.

2. Use of Estimates:

The preparation of financial statements requires estimates and assumptions to be made that affect the reported amount of assets and liabilities on the date of the financial statements and the reported amount of revenues and expenses during the reporting' period. Difference between the actual results and estimates are recognized in the period in which the results are known materialized.

3. Fixed Assets:

Fixed Assets are stated at cost net of modvat/cenvat/value added tax and include amounts added on revaluation, less accumulated depreciation and impairment loss, if any. All cost, including financing cost till commencement of commercial production, net of charges on foreign exchange contracts and adjustments arising from exchange rate variations attributable to the fixed assets are capitalized. In case of assets discarded retired from active use held for disposal are stated at the lower of their net hook value and net realizable value and shown separately in the current assets schedule.

Project under Commissioning & other capital work-in-progress are carried at cost comprising direct related incidental expenses & attributable interest.

4. Depreciation:

Depreciation on fixed assets is provided on written down value method at the rates and in the manner prescribed under Schedule XIV of the Companies Act, 1956 However, in case of plant & machinery and electrical equipment, depreciation has been charged on straight line method upto 95% of the historical cost retaining change in 5% as salvage value. Depreciation has not been charged on guest house equipments.

5. Impairment of Assets:

An asset is treated as impaired when the carrying cost of assets exceeds its recoverable value. An impairment loss is charged to the Profit and Loss Account in the year in which an asset is identified as impaired. The impairment loss recognized rn prior accounting period is reversed if there has been a change in the estimate of recoverable amount, subject to a maximum of depreciated historical cost.

6. Foreign Currency Transactions:

(a) Transaction denominated in foreign currencies is normally recorded at the exchange rate prevailing at the time of the transaction.

(b) Monetary items denominated in foreign currencies at the year end are restated at year end rates

(c) Any income or expenses on account of exchange difference on translation is recognized in the profit & loss account except in cases where they relate to acquisition of fixed assets in which case they are adjusted to the carrying cost of such assets.

7. Investments:

Current investments are carried at the lower of cost and quoted fair value, computed category wise. Long Term Investments are stated at cost Provision for diminution in the value of long term investments is made only if such a decline is other than temporary in the opinion of the management.

8. Inventories:

Items of inventories are measured at lower of cost or net realizable value, after providing for obsolescence, if any. Cost of inventories comprises of all cost of purchase, cost of conversion and other cost incurred in bringing them to their respective present location and condition. Cost of raw materials, process chemicals, stores and spares, packing materials, and other products are determined on weighted average basis. Cost of Work-in-Progress and finished stock is determined on absorption costing method on FIFO basis.

9. Turnover:

Turnover is recognized when goods are supplied/dispatched

10. Excise Duty:

Excise duty is accounted on the basis of, both, payments made in respect of goods cleared as also provision made for goods lying in excise bonded tank,

11. Employees Retirements Benefits:

Company's contribution to Provident & Pension Fund is charged to Profit and Loss Account. Gratuity and Leave Encashment Benefit are charged to Profit and Loss Account on the basis of certificate issued by Life Insurance Corporation of India, with whom policies are taken, based on their actuarial valuation.

12. Borrowing Cost:

Borrowing cost that are attributable to the acquisition of qualifying assets are capitalised as part of the cost of such assets. A qualifying asset is one that necessarily takes substantial period of time to get ready for intended use All other borrowing cost are charged to revenue

13. Provision for Current and Deferred Tax:

Provision for current tax made after taking into consideration benefits admissible under the provisions of the Income Tax Act, 1961. Deferred tax resulting from "timing difference" between book and taxable profit is accounted for using the tax rates and laws that are enacted or substantially enacted as or the balance sheet date. The deferred tax asset is recognized and carried forward only to the extent that there is a reasonable certainty that the asset will be realized in future.

14. Employee Separation Costs:

Compensation to employees who have opted for retirement under the voluntary retirement scheme of the Company is debited to the profit and loss account in the year of payment.

15. Provision, Contingent Liabilities & Contingent Assets:

Provisions involving substantial degree of estimation in measurement are recognised when there is a present obligation as a result of post events and it is probable there will be an outflow of resources Contingent Liabilities are not recognised but are disclosed in the notes. Contingent assets are also not recognized in the financial statement

16. Segment Reporting:

The accounting policies adopted for segment reporting are in line with AS-17 as issued by the Institute of Chartered Accountants of India and the same accounting policies of the company are followed for the Segment reporting. Revenue expenses have been identified to segments on the basis of their relationship to the operating activities of the segment and common expenses/income are allocated to segment on a reasonable basis. Management has identified two reportable business segments namely Methanol and Formalin and Siliguri has been identified as a locational segment.

17. Government Grants and Subsidies:

Government grants/subsidies related to depreciable fixed assets are treated as deferred reserve which is allocated to income over the period and proportions in which depreciation on those assets is charged. Government grant/subsidies related to revenue (like transport subsidy, power subsidy etc) are recognised as income in the year of receipt instead in the year to which it pertains due to the uncertainly and abnormal delay attached to the same.

18. No TDS has been disclosed on Interest Receivable from bank.


Mar 31, 2002

1) GENERAL

The Company is maintaining books of accounts on accrual basis in accordance with the generally accepted accounting standards U/S 211 of the Companies Act. 1956 and principles suggested by the Institute of Chartered Accountants of India unless otherwise stated.

2) DEPRECIATION:

The Company is following depreciation policy in accordance with provisions of the Companies Act., 1956. The rate of depreciation is disclosed in the schedule of fixed assets of the Balance Sheet. The depreciation is calculated on the pro-rata basis as per the rates given in the schedule XIV of the Companies Act, 1956. For Plant & Machinery the straight line method on continous process basis and for other assets the WDV method of depreciation is followed.

3) INVENTORIES:

Inventories are valued as under:-

(i) Finished Products At estimated cost or realisable value which ever is less.

(ii) Work in Process -do-

(iii) Other inventories of Chemicals,Catalyst and Stores & Spares. At average cost.

4) NON-MOVING AND SLOW-MOVING INVENTORIES :

The inventory includes various items which have lost its value on account of non-movement, obsolescence or unserviceable. To account for such losses, a policy for inventory items which have not moved for last (10) ten years has been formulated with approval by the board in its meeting No. 188 held on 20-01-1999. As a result a sum of Rs. 3,12,516 has been provided for through consumption accounts of stores & spares.

5) GRATUITY:

Gratuity liability is accounted for on the basis of annual premium paid to LIC against Group Gratuity cum Cash Accumulation Policy.

6) INSURANCE:

Claims with insurance companies are accounted for as and when assessed and accepted by the Insurance Company.

7) MISCELLANEOUS INCOME:

Miscellaneous income like sale of scrap, interest from customers on delayed payment etc. are accounted for on receipt basis.

8) TRANSPORT SUBSIDY:

Transport Subsidy receivable from the State Government is accounted for on accrual basis upto 1992- 93. Thereafter, the same is being accounted for on receipt basis due to abnormal delay in settlement of subsidy claims. During the year under review, Rs. 60,20,032/- was received as Transport Subsidy and the same is shown as "Extra-ordinary item" in Profit & Loss Appropriation Account.

9) SALES:

Sales are inclusive of Duties & Taxes.

10) EXCISE:

Excise duty on finished goods is accounted for on clearance of goods from excise bounded tank/ godown.

11) COSTING SYSTEM

Company has started maintaining basic records of costing duly reconciled with the financial records from the current financial year.

 
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